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A social dividend is a proposed method for distributing the economic profits (or surplus value) generated by publicly owned enterprises in a socialist economic system. A social dividend would provide every citizen with a share of the profit generated by publicly owned enterprises, potentially eliminating the need for the social welfare programs and income redistribution that exists under capitalism, as well as eliminating the costs associated with their administration.
The social dividend is a key feature of many models of market socialism, where it represents the return on publicly owned assets to the public. It has appeared in proposals by economists Oskar Lange, Abba Lerner and James Meade. Contemporary economists who propose social dividend systems in their models of market socialism include James Yunker, John Roemer, Pranab Bardhan and David Schweickart. These models of market socialism differ from cooperative forms of market socialism, in which the economic profits generated by firms would be distributed only among the members/employees of each individual firm.
Under a social dividend system, an individual would be entitled to a share of the social product produced by publicly owned assets, to be received in addition to normal wage and salary payments. An unemployed individual would also be entitled to a share of the social dividend as a form of basic income, but the exact institutional arrangement varies among different proposals, for example, there might be certain constraints on the receipt of the dividend payment imposed on the unemployed.
Precursors and origins
Léon Walras, one of the founders of the neoclassical school of economics, believed that nationalized land and natural resources would provide a source of income to the state that would eliminate the need for income taxes.
Oskar Lange is credited with the first use of the phrase "social dividend". In Lange's theory of market socialism, a central planning board would allocate the profit and rent accumulated by public enterprises to achieve economic growth targets and ensure a reasonable amount of social equality through the provision of a social dividend to consumers and workers.
In John Roemer's and Pranab Bardhan's model of market socialism, public ownership takes the form of public ownership of shares in firms. The dividend payments, instead of accruing to a small class of private owners, are divided among all adult citizens. The social dividend supplements wages and income derived from personal savings.
Social dividends have an alternate definition which may be described as the citizen's egalitarian share of surplus tax revenue. This form of social dividend exists within the framework of capitalism since productive assets would be privately owned, operated for private profits and would not directly finance the social dividend.
Similar systems have been implemented to some degree on the basis of public ownership of natural resources, most notably in Alaska (Alaska Permanent Fund) and in Norway (The Government Pension Fund of Norway).
- Basic income
- Citizen's Dividend
- Lange model
- Public enterprise
- Profit (economics)
- Social ownership
- Socialist economics
- Sovereign wealth fund
- Market socialism
- Negative income tax
- Social Dividend versus Basic Income Guarantee in Market Socialism, by Marangos, John. 2004. International Journal of Political Economy, vol. 34, no. 3, Fall 2004.
- The Social Dividend Under Market Socialism, by Yunker, James A. 1977 in Annals of Public and Cooperative Economics journal.
- Philosophy and the Problems of Work: A Reader, 2001, by Kory Schaff. ISBN 978-0742507951. (P.344): "A citizen in this society will receive income from three sources: wage income, which will vary depending on her skill and the amount of time she works, income forthcoming by savings, which will also vary across households, and the social dividend, that will be, in principle, approximately equal across households."
- On the Economic Theory of Socialism, by Lange, Oskar. 1936. The Review of Economic Studies, Vol. 4, No. 1: "It seems, therefore, convenient to regard the income of consumers as being composed of two parts: one part being the receipts for the labour services performed and the other part being a social dividend constituting the individual's share in the income derived from the capital and the natural resources owned by society."
- Philosophy and the Problems of Work: A Reader, 2001, by Kory Schaff. ISBN 978-0742507951. (P.344): "The second socialist aspect of this economy is that the profits of firms will not go to a small fraction of the citizenry but will be divided, after taxes, more or less equally among all adult citizens, taking a form that Oskar Lange called a social dividend."